The Rhode Island Retirement Security Act sought to address a potential $15 billion unfunded public pension liability by introducing a defined-contribution retirement plan and reducing benefits under the existing system.

In her June 30 Commentary piece (“Pension deal hurts taxpayers, workers”), Monique Morrissey of the Economic Policy Institute argues that the combination of reduced benefits and supposedly higher costs to state and local governments has worsened the state’s pension outlook.

Yet the argument that the new defined-contribution portion of the state’s pension plans will be more expensive than the previous defined-benefit system ignores the fact that the state’s unfunded liability had pushed annual employer contributions above a whopping 35 percent of employee salaries.

Switching partially to a defined-contribution system was a sound choice to prevent the funding gap from growing ever larger and crowding out funding for current state and local government services. If the unfunded liability can be paid down, Rhode Island will have addressed the number-one threat to its fiscal security.

Ms. Morrissey is right that employees now shoulder a portion of the risk for their retirement security, where once they bore none. The tradeoff is that families can have a bit more confidence that the costs of a teacher’s retirement package will not threaten their child’s education.

The author mistakenly identifies the failure of governments to fund their pension obligations, as opposed to exorbitant benefits, as the main driver of pension underfunding. In reality, both factors have played a central role in putting public-sector defined-benefit plans across the nation in the position where sacrifices must now be made to avoid future catastrophe.

The “401(k)-ification of public pensions” that Ms. Morrissey dismisses is a necessary solution that can provide retirement security alongside consistent, manageable costs to state and local government.

Bob Williams is the president of State Budget Solutions, a national nonpartisan organization dedicated to fiscal responsibility and pension reform. He is also a former state legislator and gubernatorial candidate in Washington State.

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